Industry News

Mortgage lending cuts into Wall Street banks’ profits

Originations down, foreclosures up in Q2
Published on Jun 15, 2007

Wall Street investment banks Goldman Sachs, Bear Stearns and Lehman Brothers reported a drop in revenue from mortgage underwriting, although second-quarter profits were still up at two of the three firms. Bear Stearns Companies Inc. said profits were down 10 percent, despite record setting second-quarter revenues of $2.51 billion. Excluding a one-time accounting charge, net income would have been $486 million, down from $539 million for the second quarter of 2006. Earnings per share would have been $3.40 for the quarter. Fixed-income net revenues were $962 million for the 2007 second quarter, down 21 percent from the record $1.2 billion posted in the second quarter of 2006. Mortgage-related revenues reflected both industry-wide declines in residential mortgage origination and securitization volumes and "challenging market conditions" in the subprime and Alt-A mortgage sectors, the company said. Goldman Sachs Group Inc. blamed weak results in mortgages, particularly in the ...